Smashwords Previews Breakthrough ebook Publishing Platform
Where Authors Control the Pricing, Sampling and Marketing of Their Works

Authors Earn 85% of Net Sales Proceeds

NEW YORK, Feb. 11, 2008 -- O'Reilly
Tools of Change -- Smashwords, a new digital publishing startup, today
previewed a breakthrough ebook publishing platform for authors and publishers
at the O'Reilly Tools of Change publishing conference in New York City. The
company began accepting applications today for a limited number of beta testers
at http://www.smashwords.com.

Smashwords allows anyone to become a published ebook author
in minutes. The site is ideal for full length novels, short fiction, essays,
poetry, personal memoirs, non-fiction and screenplays. Authors receive 85% the
net sales proceeds from their works, and retain full control over sampling,
pricing and marketing.

The site offers authors free viral marketing
tools to build readership, such as precent-based sampling; dedicated pages for
author profiles and book profiles; support for embedded YouTube book trailers,
author interviews and video blogs; reader
reviews; and reader "favoriting."

"We plan to do for ebook authors what
YouTube did for amateur video producers," said Mark Coker, founder and CEO
of Smashwords, based in Los Gatos, Calif. "We make digital publishing
simple and profitable for authors and publishers."

For fans of the written word, Smashwords
provides an opportunity to discover new voices in literature, poetry and
non-fiction. The site offers useful tools for search, discovery, and personal
library-building.

It's easy to publish on Smashwords. Authors
simply upload the word processing file of their work to the site; assign
sampling rights to make up to 99% of the book available as a free sample; and
then assign pricing (including the "Radiohead" honor system option
where authors let customers decide what to pay). Smashwords automatically
converts the book into multiple DRM-free ebook formats (.txt., .rtf, .mobi,
.pdf), making the book available for download or online reading.

The inspiration for Smashwords grew out of
founder Mark Coker's frustrations as an aspiring novelist. In 2002, Coker and
his wife, Lesleyann, co-authored a roman a clef novel entitled Boob Tube that
explores the behind- the-scenes world of daytime television soap operas
(Lesleyann is a former reporter for Soap Opera Weekly Magazine). Despite two
years of representation from one of New York City's most respected literary agencies,
their agent was unable to land a book deal. Some publishers said they rejected
the manuscript because they questioned whether soap opera fans read books.

Coker concluded that in today's digital age,
there's no reason why authors shouldn't be able to publish anything they want -
and readers should determine what's worth reading, not just publishers. He also
determined that ebooks were the solution to enable low-cost, universal
publishing for the benefit of authors and readers around the world. Thus Smashwords
was born.

"The traditional book publishing industry
is broken from the perspective of authors, readers and publishers," Coker
says. "Most authors are never published. Authors lucky enough to land a
book deal rarely sell enough books to earn royalties beyond their initial
$5,000 to $10,000 advance. Trade publishers lose money on nearly 80% of the
books they publish because of the high costs of production, warehousing,
distribution and marketing. Further dampening profitability for authors and
publishers is the fact that bookstores often return up to 50% of their unsold
inventory for a full refund."

"I think ebooks will become increasingly
important to the book publishing industry, and will make books more affordable
to a worldwide audience," continued Coker. "By digitizing a book,
authors and publishers can immortalize their works, making them permanently
discoverable to new audiences. For authors and publishers of out of print
books, ebooks offer a great way to bring these works back to life."

According to a survey published in May 2007 by
the Association of American Publishers, ebooks are the fastest growing category
of books in an otherwise moribund book publishing industry, clocking an average
five year annualized sales growth rate of 65% vs. the overall industry average
growth of 2.4 %. However, ebooks represent only two tenths of one percent of
the overall US book market. Despite the rapid growth of ebooks, they have not
yet achieved their full potential. Several factors have conspired to dampen the
acceptance of ebooks:

1. Many publishers
insist on crippling their ebooks with draconian digital rights
management (DRM) schemes and proprietary file formats in a misguided
attempt to reduce piracy. Consumers, however, resent being treated
like criminals. They want the freedom to read the book on the multiple
devices, or print the book at their home computer.

2. Most ebooks are
overpriced. Consumers understand that ebooks cost publishers a fraction
of what it costs to print and ship a print book, so they expect
digital books to be priced differently (with Smashwords, an
author or publisher can sell an ebook for $4.95 and make a per-unit
profit tens times higher than if they had published a mass market
paperback for $6.95). Publishers have insisted on high prices because
they fear ebook sales will cannibalize print sales. While industry
experts debate the veracity of this fear, with Smashwords,
authors and publishers can earn higher per-unit profits at lower costs to
consumers.

3. Digital books
aren't paper. Although digital books hold great promise, it's tough to
match the readability, portability and simplicity of a paper book. Yet
over the last few years, significant advances in digital ink and
LCD computer displays have begun to narrow the gap. At the current rate
of technology advance, it's not unreasonable to expect that
digital screen technology will soon approximate or supersede print
on paper. The latest generation of ebook reading devices, such as
the Amazon Kindle, the IREX Iliad and the Sony Reader, for
example, deliver a satisfying reading experience for most people.
Nevertheless, it's not necessary for digital books to supplant paper books. The
two represent complementary means of consumption.

Background on Smashwords Founder,
Mark Coker

Mark Coker is an entrepreneur, author and angel
investor based in Los Gatos, California. He has a track record of leveraging
the power of the Internet to bring positive social change.

His previous startup, BestCalls.com, which he
launched in 1999, set out to level the playing field for small stock market investors
who at the time were denied access to the earnings conference calls of publicly
traded companies. At BestCalls, he championed fair disclosure and argued small
investors deserved to receive market-moving information at the same time as big
Wall Street investors. His work served as a catalyst for the SEC's ground
breaking Regulation FD, which mandated a level playing field for all investors.
BestCalls was acquired in 2002 by Shareholder.com and is now owned and operated
by the Nasdaq Stock Exchange. See this link to Wikipedia for more background on
his work at BestCalls.

In 2002, he and his wife, Lesleyann, began
writing Boob Tube, a novel that explores the behind-the-scenes world of daytime
television soap operas. Boob Tube is published on Smashwords.

In addition to his work with Smashwords, Mark
serves on the advisory board for, and is an investor in, Flatworld Knowledge, a
provider of open source textbooks.

Since 1993, Mark has owned Dovetail Public
Relations, an award-winning Silicon Valley PR firm. Mark looks forward to
translating his marketing knowledge into the book marketing tools offered at
Smashwords.

About Smashwords, Inc.

Founded in 2007, privately held Smashwords
operates an online self- publishing platform for authors of ebooks and
screenplays. Smashwords allows anyone to become a published author in minutes.
The free service puts authors in full control over the marketing, pricing,
sampling and licensing of their works. In addition to receiving exposure to
hundreds of thousands of potential readers, authors receive 85% of the net
proceeds from sales of their works. For traditional publishers of print books,
Smashwords offers a compelling distribution channel through which they can
digitize their entire portfolio of frontlist, backlist and out-of-print books.
For readers, Smashwords offers the opportunity to discover exciting new voices
in fiction and non-fiction. Smashwords, Inc. is based in Los Gatos, California,
and can be reached on the web at http://www.smashwords.com.